Vineyards and Wineries in Minnesota

EXTENSION CENTER FOR COMMUNITY VITALITY Vineyards and Wineries in Minnesota A STATUS AND ECONOMIC CONTRIBUTION REPORT Authored by: Brigid Tuck, Extension Center for Community Vitality, and William Gartner, Department of Applied Economics IN PARTNERSHIP WITH: NORTHERN GRAPES PROJECT Vineyards and Wineries in Minnesota A STATUS AND ECONOMIC CONTRIBUTION REPORT June 2013 Authored by: Brigid Tuck and William Gartner Partners/Sponsors: Northern Grapes Project Special Thanks To: Minnesota Grape Growers Association Jim Luby, Professor, University of Minnesota Extension Tim Martinson, Senior Extension Associate, Cornell University Chrislyn Patricka, Extension Support Specialist, Cornell University © 2013 Regents of the University of Minnesota. All rights reserved. University of Minnesota Extension is an equal opportunity educator and employer. In accordance with the Americans with Disabilities Act, this material is available in alternative formats upon request. Direct requests to the Extension Store at 800‐876‐8636. Printed on recycled and recyclable paper with at least 10 percent postconsumer waste material. VINEYARDS AND WINERIES: MINNESOTA i Table of Contents 1. NORTHERN GRAPES PROJECT 1 2. VINEYARDS AND WINERIES IN MINNESOTA: EXECUTIVE SUMMARY 2 3. SURVEY METHODOLOGY AND RESPONSE RATES 3 4. VINEYARD CHARACTERISTICS 5 Vineyard Operations 9 Marketing and Grape Utilization 11 Future Plans 13 Grape Varieties 15 5. WINERY CHARACTERISTICS 22 Grape Acquisition 26 Winery Sales and Production 28 Winery Marketing and Collaboration 32 Future Plans 36 6. ECONOMIC CONTRIBUTION OF VINEYARDS AND WINERIES IN MINNESOTA 39 Direct Effects 39 Indirect and Induced Effects 40 Total Economic Effects 40 Cold‐Hardy Related Economic Effects 41 7. SUMMARY AND CONCLUSIONS 42 8. APPENDIX ONE: PARTICIPATING INDUSTRY ASSOCIATIONS 43 9. APPENDIX TWO: COLD‐HARDY GRAPE DEFINITION 44 10. APPENDIX THREE: WINERY TOURIST AND EXPENDITURE CALCULATIONS 46 VINEYARDS AND WINERIES: MINNESOTA ii NORTHERN GRAPES PROJECT The emergence of cold hardy wine grape cultivars in the 1990s created a new and rapidly expanding industry of small vineyard and winery enterprises in states across New England, northern New York, and the Upper Midwest. While the North American ancestry of these cultivars confers exceptional climatic adaptation and disease resistance, other challenges to production, processing, and marketing have slowed their successful commercialization in regional and national markets. Because their growth habit and fruit composition differ from traditional grape hybrids, new viticulture and enological practices are needed. Marketing tools are also required to educate consumers unfamiliar with the grapes and the wine styles they produce. Consequently, the long-term viability of these new businesses requires coordinated research and extension to optimize viticulture, enological (winemaking), business management, and marketing practices. To meet the needs articulated by industry stakeholders, the United States Department of Agriculture funded the Northern Grapes Project. The Northern Grapes Projects brings together researchers, Extension specialists, and industry professionals from 13 states to address viticulture, enological, business management, and marketing issues related to growing cold hardy grapes. After five years, the project teams intend to have accomplished the following goals: 1) production and sales of wines made from cold climate cultivars will have doubled, 2) improved quality resulting from better growing and winemaking practices will have improved customer retention and driven repeat sales, 3) enhanced breeding and cultivar evaluation will have resulted in an accelerated pace of cultivar release, 4) cold climate cultivars will establish unique regional marketing identities in their area, 5) wineries will have understood and applied business and tasting room management practices that drive sales and profitability, and 6) wineries and vineyards will have successfully transitioned from “startup” to “sustainably profitable.” To measure progress on these goals, one of the first tasks of the project team was to conduct a baseline survey. This survey, sent to grape growers and wineries in the participating states, gathered data on the current status of the grape and wine industry in general and on cold-hardy grape and wine production, specifically. Questions were asked pertaining to sales and production (wineries and vineyards), growing practices (vineyards), and operating practices (wineries). This document reports the results of the baseline survey for vineyards and wineries in Minnesota. It also quantifies the economic contribution of the industry. VINEYARDS AND WINERIES: MINNESOTA 1 VINEYARDS AND WINERIES IN MINNESOTA: EXECUTIVE SUMMARY In spring 2012, grape growers and winery owners in 13 states were surveyed under the Northern Grapes Project. Questions asked pertained to sales and production (wineries and vineyards), growing practices (vineyards), and operating practices (wineries). The goal was to establish an industry baseline and quantify the economic contribution of the industry. This report presents the results for Minnesota. In total, 101 vineyards and 34 wineries in Minnesota provided full answers to the surveys. In 2011, the grape growing and winery industries contributed $59 million in economic activity in Minnesota. Of this, $16.4 million was generated by vineyards, $22.1 million by wineries, and $20.5 million by winery tourists. In 2011, the grape growing and winery industries supported 3,250 employees in Minnesota. Employees received $19.7 million in labor payments. Rapid growth continues in the industry in Minnesota. Nearly half of Minnesota’s vineyards have been established in the last five years. Forty-four percent of wineries have begun operations since 2007. In addition, the volume of grapes on the market continues to increase substantially. Nearly half of all planted acreage has been established since 2007. Since grapes need three to four years to mature, there is a lag with those grapes being available for market. The Marquette grape has gained wide acceptance. Since being released in 2006, the variety has come to represent over half of planted cold-hardy red cultivars. Wineries and vineyards are demonstrating increasing sophistication in their interactions. The most common method for marketing grapes is via a contract with a winery. Wineries are active in vineyard management. Wineries have opportunities for further market development. Over two-thirds of sales are made from the tasting room. The majority of a winery’s sales (86%) are of the wine itself. Wineries view their own wine branding as their most important marketing strategy. Hosting special events and working with local organizations are second and third most important. Wineries are concerned about government policies and regulations. They also view sales as a future challenge to the growth and development of their winery. Vineyard owners view pests, insects, and diseases as the largest challenge to the future growth and development of their vineyards. VINEYARDS AND WINERIES: MINNESOTA 2 SURVEY METHODOLOGY AND RESPONSE RATES In early 2012, project researchers at the University of Minnesota sent a survey to grape growers and wineries in the participating states. Grower and winery lists were provided to the University of Minnesota by industry associations in each state (see appendix 1 for a list of participating associations). An email was sent to all members of these lists, resulting in 2,746 invitations to participate in the survey. Of these, 501 responded, for an overall response rate of 18 percent. In addition, links to the survey were available allowing individual growers and wineries not directly associated with an industry group, and thus not receiving a direct email invitation, to participate in the survey. These links were also announced during the Northern Grapes Project webinars. The survey links generated 110 responses. Therefore, in total, there were 611 total responses to the survey. Table 1-1 lists the participating states, the number of wineries and growers invited based on the industry association lists, the number of respondents using the open links, and the response rate. Minnesota has the highest membership totals.1 South Dakota had the highest response rate. The Minnesota Grape Growers Association provided e-mail addresses for its membership. In total, 1,012 invitations to participate in the survey were sent to potential Minnesota growers and wineries. Of those, 167 individuals responded, for a response rate of 17 percent. Table 1-1: Northern Grapes Project Baseline Study Participating States, Response Rates State Total Number of Contacts from Number of Response Rates Industry Associations Responses Connecticut 32 5 16% Illinois 272 52 19% Iowa 222 66 30% Massachusetts 28 10 36% Michigan 164 36 22% Minnesota 1,012 167 17% North Dakota 54 14 26% Nebraska 172 46 27% New Hampshire 51 14 27% New York 202 32 16% South Dakota 14 11 79% Vermont 47 18 38% Wisconsin 476 97 20% 1 Responses were categorized by state the grower or winery owner indicated as the state in which their operation is located. VINEYARDS AND WINERIES: MINNESOTA 3 Not all of the survey responses were applicable to the baseline survey. Association memberships are generally open to all interested parties and therefore membership lists include individuals who may be considering growing or producing wine, or individuals who previously grew grapes or produced wines. The lists may also contain

Load more